Cmhc Condo Buyers Guide

8/14/2019 Cmhc Condo Buyers Guide

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C O N D O M I N I U M

BUYERS G UID E


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CONDOMINIUM BUYERS GUIDE

CMHC offers a wide range of housing-related information, For details, call 1 800 668-2642or visit our Web site at www.cmhc.ca

Cette publication est aussi disponible en franais sous le titre : Logements en coproprit Guide de lacheteur 63101


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This research project was funded by Canada Mortgage and Housing Corporation (CMHC). The contents, views andeditorial quality of this report are the responsibility of the author(s) and CMHC accepts no responsibility for them orany consequences arising from the reader's use of the information, materials and techniques described herein.

Disclaimer

This guide is provided for general information purposes only. Any reliance or action taken based on the informationprovided is the responsibility of the user. Readers are advised to consult appropriate professional resources to determine

what is suitable in their particular case. CMHC assumes no responsibility for any consequences arising from use of theinformation provided in guide.

National Library of Canada cataloguing in publication data

Main entry under title: Condominium Buyers Guide

Issued also in French under title: Logements en coproprit Guide de lacheteur

ISBN 0-662-33517-1Cat. no. NH15-407/2003E

1. CondominiumsPurchasingCanada.2. House buyingCanada.I. Canada Mortgage and Housing Corporation.

HD7287.67C3C66 2003 643'.2 C2003-980058-X

Printed: 2005, 2006

2002 Canada Mortgage and Housing Corporation.All rights reserved. No portion of this book may be reproduced, stored in a retrieval system or transmitted in any formor by any means, mechanical, electronic, photocopying, recording or otherwise without the prior written permission ofCanada Mortgage and Housing Corporation. Without limiting the generality of the foregoing no portion of this bookmay be translated from English into any other language without the prior written permission of Canada Mortgage andHousing Corporation.

Printed in CanadaProduced by CMHC


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So You've Decided to Buy

a Condominium . . .

Condominium living is a popular optionfor many Canadians as it can be a relativelycarefree housing option. Currently, in someparts of the country, one out of three newhomes built is a condominium. Interest incondominiums tends to grow with a shortageof rental accommodation, relatively lowmortgage interest rates, and urban corerenewal. Most major newspapers now includea condominium section which recognizes the

increasing number of people who already liveinor aspire to live ina condominium.

This Guide has been created to help youbecome an informed condominium buyer andto help you make the best choice. Please seethe glossary at the end of the Guide for fulldefinitions of some of the terms used in thisguide.

The Guide will give you the basic backgroundinformation you need to get started on thepath to condominium ownership. It willidentify important questions to askandthe people you should be askingbefore youmake this important purchase. At the endof the Guide, we've provided you with acondominium selection checklist to help younarrow down the choice between the differenttypes of condominiums you might see.

This Guide provides a general overview of thepurchase of condominiums. It is not intendedto provide legal or technical advice. It isrecommended that you retain appropriatelegal and technical professionals to guide youwith any condominium purchase you mayconsider.

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Condominium Buyers Guide


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This Guide was developed with the help of many talented and dedicated people serving thehousing and condominium industry in Canada. CMHC would like to acknowledge thecontributions of the following people:

Alex AstburyJamie BleayDon BradenMichael CelentanoSteve ChapmanMichel CharleboisRonald DanksDavid DunnJoanne LucasSandra Marshall

Robert MarshallIan MelzerEmer ParkeBart PorterDawn RingBill SempleAlex SpeigelBernie WinterDebra Wright

CMHC would like to express its thanks to the Canadian Condominium Institute for its activesupport in the development of this publication. Finally, the efforts and dedication of the projectteam led by HWB Inc. in the organization and writing of this Guide is gratefully acknowledged.

Duncan HillPolicy and Research DivisionCanada Mortgage and Housing Corporation

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Acknowledgements


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So Youve Decided to Buy a Condominium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iAcknowledgements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

1 - Condominium Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1What Is a Condominium?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1What Types of Condominiums Are There? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2What Do I Own When I Buy a Condominium?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Are Condominium Regulations the Same Across Canada? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3What Rules and Restrictions Might I Encounter in a Condominium? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Who Takes Care of the Building and Grounds? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5What Insurance Will I Need? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Can I Rent My Condominium? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2 - What Type of Condominium is Right for Me? . . . . . . . . . . . . . . . . . . . . . . . . . . . 9New, Re-sale or ConversionWhat Are the Differences? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9New Condominiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Conversion Condominiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Existing/Re-sale Condominiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

AffordabilityHow Much Will it Cost? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Condominium ContributionsWhat's Included in My Fees? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Extraordinary Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Questions to Ask in Choosing a Condominium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3 - Getting Help from the Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Who Should I Consult about Buying a Condominium? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19How do I Know if a Condominium is in Good Financial Condition? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

How do I Know if a Condominium is in Good Physical Condition? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Physical Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23What Information Does the Condominium Corporation Have that Could Help Me? . . . . . . . . . . . . . . . . . . . . 25

Appendix A - Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Appendix B - Where to Find More Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Appendix C - Condominium Selection Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Table of Contents


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1

1 - Condominium Ownership

Condominium living can offer theprospective homeowner many desirableattributes such as affordable housing and

low maintenance requirements. Manycondominiums have enhanced securityfeatures over that found in single familyhouses. Condominiums can be completecommunities within one complex offeringa wide range of social, entertainment andrecreational activities. However, buyers shouldbe awarebefore they buyof many issuessurrounding the purchase of, and the lifestylein, a condominium. This section of theGuide will help prepare you for successful

condominium living.

What Is a Condominium?

A condominium typically refers to a formof legal ownership, as opposed to a style ofconstruction. Condominiums are most oftenthought of as high-rise residential buildings,but this form of ownership can also apply totownhouse complexes, individual houses and

low-rise residential buildings. Condominiumsare also known as strata in British Columbiaor syndicates of co-ownership in Quebec.

Condominiums consist of two parts. The firstpart is a collection of private dwellings calledunits. Each unit is owned by and registeredin the name of the purchaser of the unit.The second part consists of the commonelements of the building that may includelobbies, hallways, elevators, recreational

facilities, walkways, gardens, etc. Commonelements may also include structural elementsand mechanical and electrical services.The ownership of these common elementsis shared amongst the individual unit owners,as is the cost for their operation, maintenanceand ongoing replacement.

Each unit owner has an undivided interestin the common elements of the building.This ownership interest is often referred to

as a unit factor. The unit factor for anyparticular unit will generally be calculated inproportion to the value that the unit has inrelation to the total value of all of the unitsin the condominium corporation. The unitfactor will tell you what your ownershippercentage is in the common elements andwill be used in calculating the monthly feesthat you must pay towards their upkeep andrenewal.

The creation of a condominium is regulatedby provincial or territorial condominiumlegislation and municipal guidelines. It canbe created in many different ways. In someprovinces, a developer, or other interestedparty, may register a declaration to create acondominium, while in others, an applicationmay be made to have title issued for theunits pursuant to an approved plan ofcondominium. The operation of

condominiums is also governed by provincialor territorial legislation and the condominiumcorporation's own declaration, by-laws andrules.

Once a condominium corporation has beenestablished, a Board of Directors, elected by,and generally made up of, the individualcondominium owners, takes responsibility forthe management of the corporation's businessaffairs. There is usually a turnover meeting

where this transfer of responsibility takesplace. Each unit owner has voting rights atmeetings. Your voting rights will generallybe in proportion to your unit factor.


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What Types of Condominiums

Are There?

Residential condominiums can be high-riseor low-rise (under four storeys), town or rowhouses, duplexes (one unit over another),triplexes (stack of three units), single detachedhouses, stacked townhouses or freehold plots.There are even mixed-use condominiums thatare partly residential and partly commercialbuildings. They come in various sizes withdiverse features and they can be found inalmost every price range.

What Do I Own When I Buy

a Condominium?

When you buy a condominium, you ownyour unit, as well as a percentage of thecommon property elements allocated to theunit. The boundaries of each individual unitand the percentage of common elements youown may vary from condominium tocondominium, depending on how they are

specified in the condominium's governingdocuments. Sometimes, the unit boundarycan be at the backside of the interior drywallof the units dividing walls. Alternatively, theunit boundary can be the centre line of theunits walls. The boundaries of yourcondominium unit are an importantconsideration at the time of purchaseparticularly if alterations and renovationsare a potential part of your purchase plan.

The unit typically includes any equipment,systems, finishes, etc. that are contained onlyin the individual unit. The right to use oneor more parking spots and storage areas maybe included. While you may have exclusiveaccess to parking spot or storage area, youseldom actually own the space itself.

For a freehold condominium (or a bare/vacantland condominium), the unit may be theentire house including the exterior walls, the

roof and in some cases, the land surroundingthe structure. Prior to making a purchase, youmay wish to hire a professional surveyor toreview the site plan for the condominiumcorporation so you know exactly where youunits boundaries lay.

Components of building systems that servemore than one unit, such as structuralelements and mechanical and electricalservices, are often considered part of the

common property elements, particularlywhen they are located outside of the unitboundaries specified in the condominiumsgoverning documents.

There may be some parts of thecondominium complex that are calledexclusive use common property elements.They are outside the unit boundaries, butare for the exclusive use of the owner of a

particular unit. Balconies, parking spaces,storage lockers, driveways and front or rearlawn areas are common examples of exclusiveuse common property elements. It isimportant to be aware of any exclusive usecommon property elements before you makean offer to purchase a condominium. Whilethese spaces are exclusive to your use, theremay be restrictions on how and when you usethem. For instance, you many not be able topark a boat, RV or commercial vehicle in

your assigned parking spot. There may alsobe restrictions on what you can place on yourbalcony.


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Are Condominium Regulations the

Same Across Canada?

No, each province and territory has its ownregulations and legislation specific to theregistry, construction and operation ofcondominiums. You should become familiarwith the regulations and legislation in yourown province or territory before you buy acondominium. Sources of information forprovincial and territorial legislation are providedat the back of this Guide (see pages 29 to 33).

What Rules and Restrictions MightI Encounter in a Condominium?

Every condominium is governed by itsown unique rules, regulations and by-laws.These may be very strict or very relaxeddepending on the nature of the condominiumcorporation. These are necessary to ensurethat condominiums are properly operatedand maintained, and to define the rightsand obligations of the individual owners.

With respect to rules regarding the individualowners, condominiums may have restrictionsregarding the number of occupants per unit,pets, noise, parking and when certainamenities may be used.

Many condominiums have strict rulesconcerning the alteration of the unit space orits appearance. For example, the condominiumcorporation may require all the exterior doors

of units to be the same colour to keep thearchitectural and community aspect of thecondominium intact. Additionally, you mayhave to get the permission from thecondominiums Board of Directors before youchange exterior fixtures or install a satellitedish, especially as some changes may affectthe condominium structure or safety.

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What Does Freehold Mean?

The biggest difference between a freehold

condominium and a regular condominium is whatis included as part of the unit.With a freeholdcondominium, you own the plot of land andany structure on that land such as a house ortownhouse. You are normally responsible for thecare and upkeep of the entire house, including theexterior walls and roof, as well as the lawn,

garden, driveway and garage.

With a freehold condominium, the commonproperty elements might include access roads tothe units, recreational facilities, visitor parkingarea or a park with a playground. These itemsmay be the responsibility of the condominiumcorporation. All unit owners pay a monthlycondominium fee toward their upkeep.

With a regular townhouse or house condominium,the unit typically consists of the interior of thehouse itself, while the exterior of the house andthe plot of land on which the unit sits areconsidered part of the common elements. Thismeans that repair and maintenance of items likeexterior walls, windows, lawns, gardens anddriveways may be the responsibility of the

condominium corporation. In a freeholdcondominium, you usually have more freedom tomake improvements, such as landscapingfeatures, to the unit. However, there are usuallyprovisions that give the condominium corporationsome control over owners modifying the unit, suchas determining when the roof will be repaired, andwhat colour the shingles must be. So if you wantto change the colour of your door or build adeck in your backyard, you may have to ask forpermission from the Board of Directors.

Note: In some provinces, there are bare/vacant

land condominiums.The land and any structure on itmake up the unit and maintenance can be fullythe responsibility of the condominium corporationor the unit owner.


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Noise is an important consideration,especially for people moving from asingle-family dwelling to a multi-unit

condominium. Many condominiums haverules regarding what noise levels will betolerated and at what hours. For example,if you are hosting a party in your unit, youmay be asked to turn the music down ata specific hour. You may wish to clarify therules regarding noise, and if possible, talk tocurrent residents about any noise problemsthey have experienced in the past and howthey were handled.

Individual condominium owners may beobliged to attend condominium meetingsor serve on condominium boards andcommittees. Almost all condominiums haverequirements for the payment of monthlycondominium fees. There can also bemandatory charges for unforeseen repairsto the condominium common elements.

Ensure you carefully review and consider all

rules and obligations when considering thepurchase of a condominium. They should beavailable from the units vendor (the seller),the property manager or the Board ofDirectors. The rules of the condominiumwill be clearly outlined in the condominiumgoverning documents, and you shouldbecome familiar with them prior topurchasing a particular condominium unit.

While the rules and regulations of

condominiums may initially seem to beoverly strict, particularly to those used torental housing or owning their own home,they help to ensure that condominiums aresafe and enjoyable communities to live in forall concerned.


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Moving From Single-Family

to Multi-Unit

Living in a detached house can be quite differentfrom living in a multi-unit building. Here are somepoints to consider if youre thinking of makingthe switch from a house to an apartment-typedwelling.

NoiseIn a multi-unit, your neighbours are much closer,so you may hear them more.Many condominiumshave strict rules regarding how much noise will betolerated,and at what hours of the day.Noise canalso come from the mechanical services such asplumbing, heating, ventilation and air-conditioningsystems, elevators and garbage chutes. Whenpurchasing a condominium, you may want toconsider the location of these services relative tothe unit you are thinking of buying. Additionally,when buying a new condominium, you may wantto ask the developer if any sound transmissionreduction measures have been used in theconstruction of the buildings walls, ceilings andfloors.When buying an existing condominium, tryto visit the unit during the evenings or weekend to

get a sense of what the noise may be like at thetime you are most likely to be in the building.

Consider the location of the unit relative to elevatorsand garbage chutes. Check to see if the unit facesa busy highway. If so, air-conditioning might be anecessary feature so that windows can be keptshut in the summer.

IndependenceCondominium living involves compromise. In returnfor having someone else fix the roof or cut thelawn, you will no longer have the final say in whatcolour you want your shingles to be or the timingof yard maintenance.

Your condominium unit will likely be considerablysmaller than your current home. Youll need toconsider which furniture and appliances will fitand what you might have to leave behind. Forinstance, your unit may not be able toaccommodate a washer-dryer set which maymean having to use a common laundry room.


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Who Takes Care of the Building

and Grounds?

Most condominium corporations contract-outthe day-to-day operations of the condominiumto a property management company underthe direction of the condominiums Boardof Directors. The cleaning of common areas,payment of common area utility bills,operation and maintenance of the centralspace and domestic hot water heating andair-conditioning systems, snow and garbageremoval and the collection of monthly

maintenance fees may fall under thejurisdiction of the property manager. Thereare usually limits on the property managersauthority. For example, anything that requiresa major expenditure, or an expenditure notaccounted for in the annual budget, may haveto be approved by the Board of Directors.The property manager is not usuallyresponsible for items or operational problemswithin individual units, unless they arerelated to the common elements (e.g. heating

systems, roofs, windows, exterior walls).

Some condominiums prefer to deal withthe management of daily maintenancethemselves. These are sometimes referred toas self-managed condominiums. Under thismanagement style, the Board of Directorsand in some cases, volunteers who are residentsor ownerswill carry out the day-to-daytasks of operating the condominium.

It is important when considering thepurchase of a particular condominium,to ensure you are comfortable with themanagement style, whether it is a contractproperty manager, or self-managed. This mayhave implications on both condominium fees

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PrivacyUnder most provincial condominium legislation,with reasonable notice, a person authorized by

the condominium corporation may enter your unitto carry out inspection and maintenance of thecommon elements of the condominium (such asinspection and repair of parts of the commonelements such as windows, mechanical andelectrical systems that serve your unit and others).

Lifestyles Many condominiums are specially suited for acertain lifestyles, such as families with youngchildren, or seniors. Any condominium provisionsregarding pets should be known as well. It isimportant to ensure that the prevalent lifestyle of

the condominium you are considering fits yourlifestyle.

Security Many condominiums offer increased securityservices, such as closed-circuit cameras in lobbiesand parking garages and security guards, toensure that only unit owners and authorizedpersonnel can access the building. Yourcondominium may require that any guests to yourunit sign in and out of the building. Make sure youare comfortable with the security arrangementsbefore buying.

Unit OccupancyWhile many owners of condominium unitsactually live in their units, some condominiumbuildings have a large percentage of the unitsrented out to others. If this is important to you, tryto find out from the property manager whatpercentage of the building is owner occupied.This is an important consideration, as acondominium building dominated by rentaloccupancies may not show the same pride ofownership and sense of community and securityas a building that is fully owner occupied.

Additionally, absentee owners may not have thesame maintenance and repair priorities for thebuilding as owners who actually live in thebuilding.


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and any obligations you may have towardsthe operation and maintenance of thebuilding.

The condominium unit owner is responsiblefor some maintenance duties and thecondominium corporation for others. Theseresponsibilities vary from condominium tocondominium and should be clearly laid outin the condominiums governing documents.

Maintenance duties for the unit owner caninclude:

Internal unit plumbing, appliances,heating air conditioning or electricalsystems that are contained in and serveonly that unit

Cleaning window surfaces thatare accessible from inside the unit

Cleaning some parts of the commonelements like balconies and patios thatare assigned to or exclusive use of, theunit holder

Maintenance duties for the condominiumcorporation can include:

Common plumbing, electrical and heatingand air-conditioning systems

Roof and wall repairs

Windows and doorsrepairs andreplacement

Grounds cutting, watering

Recreational amenities

Parking areas Any other part of the property that

is not part of a unit

Sometimes the responsibility for maintenanceand repair can be shared. For example, aheating and air conditioning (HVAC) system

may be part of the common elements, but theunit owner may be responsible for some taskssuch as changing filters.

What Insurance Will I Need?

Both the unit owner and the condominiumcorporation must have insurance. Specificinsurance requirements vary from provinceto province.

The corporation may be responsible forinsuring:

Common areas and units

The corporations property, such asfurniture, equipment, vehicles, etc.

Personal liabilityagainst claims forbodily injury and/or property damageoccurring on the condominium propertyor caused by some act or omission of thecondominium corporation

Boilers and equipment (for example,elevators, HVAC systems, etc.)

Directors and Officers insurancetorespond to claims made personally againsta director or officer of the condominium

All perils as per the condominiumgoverning documents


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The unit owner may be responsible forinsuring:

Personal property contents such as

appliances, furniture and jewellery,and items stored in lockers

Improvements and betterments madeto the unit (for example, finishinga basement, installing new cabinets).Check your provincial legislation to findout if insurance for improvements is yourresponsibility

Personal liability

Can I Rent My Condominium?

Many condominium buyers purchase theirunits as an investment with the intentof renting the unit out. While mostcondominium corporations allow ownersto rent their units to a third party, youshould confirm this through a review of thecondominiums governing documents andyour provincial legislation.

Summary: Questions to ask when choosinga condominium

What are the unit boundaries?

What will my maintenance obligations be? What management style is being used, and

am I comfortable with it?

What are the rules regarding the allowablenumber of occupants, noise, pets,amenities, parking, etc, and how are theseupheld?

Can I alter my units appearance? If I wantto change something, what procedure do Ihave to follow to get permission?

Does the condominium corporation havethe minimum insurance required by myprovincial or territorial legislation?

What will my insurance obligations be?

More questions that should be considered canbe found in Appendix C of this Guide.

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Condominiums come in all sizes and allkinds of building forms. There are newlyconstructed condominiums, condominiums

that have been converted from office orwarehouse space, and re-sale condominiums.This section will explain some of thedifferences between condominiums.

New, Re-Sale or ConversionWhat

Are the Differences?

The term New is applied to condominiumbuildings that are either under construction

or have been newly completed, while theterm "Conversion" can mean the buildingwas previously used for something else buthas been, or is to be, renovated for residentialuse. For example, many loft stylecondominiums are converted from formercommercial or industrial buildings.Conversions may also refer to the changingof units from rental units to condominiumunits. Both new and conversioncondominiums are usually purchased from

a developer. Re-sale condominiums areunits that have already been occupied,typically in older buildings, and are offeredfor sale by the current owner.

New Condominiums

Newly constructed condominiums can be anattractive option for the prospective owner.They offer all of the benefits of a newlyconstructed building (fresh appearance,modern fittings, surfaces, elevators, appliances)while providing unit owners with the chanceto customize their units.

You can purchase a new condominium fromthe developer either before or during itsconstruction and well before the condominium

corporation is formed. A developer mayhave some unsold units available after thecondominium has been completed and

registered. In some market conditions,a developer may wait to sell a majority(or all) of the units before registering thecondominium corporation or startingconstruction. Deposits are typically requiredto secure, or reserve, a condominium unit ina new development.

When looking over the drawings andspecifications, ensure that you are aware ofthe basis of any floor area measurements: do

they reflect the actual floor area of the unit ordo they include the exterior and interior wallfloor space areas as well? You should also beaware of plans to reduce the ceiling heightin any locations in the unit to accommodateductwork and other mechanical and electricalservices. This can have an impact on theaesthetics of the unit and affect the eventuallocation of lighting fixtures and furniture aswell as wall decorations and fittings. Similarly,

be aware of the future location of heating andair-conditioning equipment, ventilators and hotwater heaters as this can affect the availabilityand aesthetics of the space in your unit.

Other important issues to consider in thepurchase of a new condominium are relatedto construction quality. Some key questionsto consider include: Are there any specialprovisions to limit noise between units?How are the units heated, cooled and

ventilated? How are odours controlled? Is thebuilding energy-efficient? Who operates andmaintains the heating and air conditioningsystems? What options are available for suitewall and floor finishes, cabinets and fixtures?

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2 - What Type of Condominium is Right for Me?


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You should also be aware that the view fromyour unit might be subject to change if thebuilding is being constructed in a newly

developed area or as a part of a largercomplex. Be sure to ask about the futureconstruction plans for adjacent open areas asyour view may change significantly with theconstruction of a neighbouring high-rise.

When shopping around for a newcondominium, it is important to ensure thatyou are aware of what is and what is notincluded in the purchase price. For instance,are there amenities such as pools and parking?

How is access to such amenities paid for?Are finishes within the units included in thepurchase price? Are there other charges overand above the purchase price you should beaware of? Are utilities (gas, electricity andwater charges) covered in the monthlycondominium fees or not? All such questionsmust be considered to ensure that you cancompare the overall costs associated withdifferent condominiums.

Rules and regulations for new condominiumsvary from province to province, therefore it isa good idea to check your provincial legislation.New home warranties are often available fornewly constructed condominiumsmakeyourself knowledgeable about what thewarranties cover and for how long.

Quite often, there is a lengthy wait before anew condominium project is completed and

you can move in. It is always important toevaluate the current state of the constructionproject. Consider whether or not it seemsreasonable that the project will be completedby the date set out in the purchase agreementfrom the developer before making yourmoving and financing arrangements.

Agreements of purchase and sale may containprovisions that allow the developer to extendthe dates for making the units available for

occupancy. This can be problematic if youhave made arrangements to vacate yourexisting housing by a specific date basedon the original closing date. If this is animportant consideration for you, ensure thatyou are aware of any occupancy delay clausein your purchase agreement and planaccordingly. You should also check yourprovincial homeowner protection legislationto learn your rights in cases where agreed-upon occupancy dates are missed.


10

A Note on Healthy Housing TM

Research has shown that your housing choice canhave a direct impact on your health and thatof the environment. When considering newcondominium projects, be aware that somedevelopers are now offering condominiums thathave been designed to minimize energy usethrough improvements to wall insulation, the qualityof windows, and heating and cooling equipment

efficiency. Not only does this save energy andminimize harmful environmental emissions, it alsosaves you money now and in the long run.Developers are also becoming aware that thematerials and systems they construct their buildingswith can have impacts for your health. For instance,a building designed with a ventilation system for

your unit, one that distributes fresh air directly to allrooms and exhausts air from the kitchen andbathroom can greatly improve the quality of yourindoor environment.Similarly, beware that materialsand finishes used in the construction of your condo

can have an impact on the quality of your indoorair.Note also that the commuting distance between your condo and workplace will have a significantimpact on energy use and your budget. For moreinformation on Healthy Housing choices, visit theCMHC Web site at www.cmhc.ca or call1 800 668-2642


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Disclosure Statements:

In some jurisdictions, in compliancewith legislation, the developer of a new

condominium must provide you witha disclosure statement before the saleagreement is binding. This includes, amongother things, a summary of the condominiumsfeatures/amenities, the condominiumsgoverning documents and budget for the firstyear after registration. This should give yousome indication of the rules, regulations andfinancial situation of the condominiumcorporation before you buy into it.

Your province may have legislation thatprovides a cooling off period during whichbuyers can review the information containedin the disclosure statement and rescind theiragreement to purchase if they are notcomfortable with their original purchasedecision. Ensure you obtain and carefullyreview the disclosure statement within thespecified timeframe. If a cooling off periodis not provided for in your provincial

condominium legislation, try making it acondition of your offer to purchase to allowyou to have a few days to review thisinformation.

New Home Warranties:

Most provinces have new home warrantyprograms, which include new condominiumprojects. Warranty programs are put in placeto ensure that new dwellings are properlyconstructed and that they meet the

construction specifications. Warrantyprograms provide for the reporting of defectsin, or omissions of, warrantied elementswithin specific timeframes. Often, thedeveloper makes arrangements forindependent inspection companies to auditthe condominium, individual units and

common elements within the first year ofconstruction. The developer is responsiblefor correcting defects in, or omissions of,

warrantied elements that occur during thewarranty period. Should the developer defaulton this obligation, the warranty program canprovide funding to correct deficiencies inwarrantied elements up to a specifiedmaximum dollar amount. All of the ownersof new condominiums are expected tocooperate with the new home warrantyinspections and to report any defects oromissions in their units. You should be awarethat new home warranties do not cover every

item that one might construe as a defect.Be sure you are aware of what the warrantydoes and does not cover, and for how long,before making a claim. New home warrantiesmay also protect the deposit you place onyour new condominium, up to a maximumamount, in case the developer cannot, or willnot complete your unit, through no fault ofyour own. Check with your provincial orterritorial government to find out more about

the warranty program as program coveragevaries from province to province.

Advantages of buying a new condominiummay include:

A lower purchase price (depending uponmarket conditions)

More choice of locations within thebuilding (if applicable)

A broader range of options and/orupgrades

Newer buildings have less risk of having toundergo costly, noisy and intrusive repairsand renovations

New home warranty protection

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Disadvantages of buying a newcondominium may include:

Because construction may not have

started, you cannot see what you arebuying and must rely on artist sketchesand floor plans (which may change).Be sure to have the units boundaries,location, finishes, materials, chattels, etc.clearly specified in the purchase agreement.

Your initial deposit will be tied up for theduration of construction.

Financial institutions may not give youa mortgage on an unregistered

condominium. Construction of your unit may not be

completed by the expected date.

You may move into your unit whileconstruction continues in othersthis canbe noisy and disruptive.

Conversion Condominiums

Buying a conversion condominium in the

early stages of development is similar tobuying a new condominium. The biggestdifference is that the exterior of the building(or building envelope) already exists. Themajority of the construction project usuallyconsists of modifications to some of thecommon property components and thecreation of individual unit spaces.The transfer of the title of ownershipmay not take place until after occupancy.

You should check with your provincialgovernment to find out if the warrantyprogram in your province coverscondominium conversion projects.

Advantages of buying a conversion mayinclude:

Many of the same advantages of buying

a new condominium apply to conversions,(e.g. choice of unit, opportunities forupgrades, etc.).

Some conversions offer unique designs,(e.g. lofts).

Converted units are often, but not always,somewhat less expensive than a comparablesized new unit.

Conversions may be located in establishedand desirable parts of cities that are well

served by entertainment, educational,transit and other amenities.

Disadvantages of buying a conversion mayinclude:

As new home warranty programs may notapply to conversion condominiums (checkwith your provincial program), there maynot be construction warranties other thanthat offered by the developer.

The building structure and perhaps someof its internal components will already beold, which may mean major (hence costly)repairs may be needed sooner rather thanlater. This could be problematic if thecondominium corporation has not hadsufficient time to build an adequatereserve fund. This may have an impacton condominium fees and extraordinarycharges to the unit owners.

Occupancy dates can be changed dueto construction delays.


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Existing/Re-Sale Condominiums

One of the advantages of purchasing an existing

condominium is that you get to see the unit,building and grounds before you make yourpurchase. You also have the opportunity tomeet other unit owners, speak with the Boardof Directors and ask questions to the propertymanager. Consider the age of the building andwhat repairs have been made and when. Ensurethat the condominium is well maintained andmanaged. All of this will provide you withvaluable information as to whether or not thecondominium is right for you.

Estoppel/Status Certificates:

When making an offer on a re-sale unit,ensure it is conditional upon obtaining, andhaving the time to review, the corporationdocuments available to the purchaser underprovincial legislation, including an estoppelor status certificate. There may be a fee forthis certificate, but it will give you theopportunity to review information including

the condominiums governing documents,financial statements and insurance coverage.It is important to thoroughly review thesedocuments, as once you sign the offer topurchase you are contractually bound andcannot change your mind if, for example,you later find out the condominium doesnot allow pets or requires major repairs.In Alberta, there are services available tohelp you with the review of condominiumdocument packages. In other provinces youshould ask your lawyer or notary to help youreview them.

Provincial new home warranty programsdo not protect deposits made when buyinga re-sale condominium and wont provideprotection for construction defects once the

applicable warranty periods have expired.Therefore, it is important to have the purchaseof the unit contingent upon the satisfactory

inspection of the unit and building by aqualified home inspector, professionalengineer or architect.

Advantages of buying a re-salecondominium may include:

You get what you see.

There are no lengthy waiting periodsbefore you can move in unless providedfor in the condition of sale.

Deposits are often much lower for re-salepurchases and there is no GST.

You can check out the condominiumcommunity in advance to see if thecorporation is well run and the peoplewho live in it are compatible with yourneeds and lifestyle.

Older condominiums can have larger unitsizes.

Disadvantages of buying a re-salecondominium may include:

Fewer options with regard to choice of unit(within the building), decorating, or upgrades.

Older re-sale condominiums may requiremore maintenance and repair than new ones.

The amenities that you may find desirable(e.g. a workout room or whirlpool, highspeed Internet connection, securityfeatures) may not be available.

Older resale units may not be as energyefficient due to different constructionstandards in newer buildings.

Major repairs may be coming due that willrequire extra charges to the unit owners ifthe reserve fund is underfunded.

You will only receive the portion of the newhome warranty that has not yet expired.

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AffordabilityHow Much Will

it Cost?

It is important to know how much moneyyou should have set aside to purchaseandlive inthe condominium you are considering.Additionally, when you are shopping aroundand comparing different condominiums, it isimportant to be aware of the costs (purchaseprice and monthly fees) that would beincurred for each unit your are consideringso that comparisons can be made. Thissection of the Guide will outline common

condominium expenses to help you with yourbudget preparation.

Purchase Price:

For new construction, the purchase price mayinclude:

Unit sale price

Upgrades (negotiable)

Development charges

PST on chattels (e.g. appliances) being

purchased with the unit GST on the sale price

Utility hook-up fees

Landscaping fees

In some provinces, two months commonexpenses to build the reserve fund

Occupancy fees (from occupancy closingto title closing) which may include:

- Estimated common expenses basedon the disclosure statement budget

- Estimated realty taxes on the unit- Interest on the balance is due on

closing

Warranty program enrolment fees

Any costs over and above the basic unitpurchase price should be clearly outlinedin the agreement of purchase and sale.

You should budget for these charges whenyou are considering buying.

At final closing you will be required to paythe following costs:

Remainder of purchase price

Legal fees and disbursements

PST and GST on extras or upgradesto unit finishes, equipment and systems

if not included in purchase price Provincial land transfer tax

Many of these additional costs do not applyto re-sale units, since they were already paidand/or factored into the purchase price.

Recurring Costs:

There are more expenses involved in owninga condominium than just the purchase price.

You need to include the following in yourbudget:

Monthly condominium fees or commonexpenses

Property taxes

Unit and contents insurance

Mortgage payments

Amenity fees, such as storage, pool,extra parking, etc. if not includedin the common expenses

Utilities (if not included in commonexpenses)

Telephone, cable and Internet access(if not included in common expenses)

A contingency for emergency repairs

Maintenance costs associated with theupkeep of your unit


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Condominium Contributions

Whats Included in My Fees?

Unit owners pay a monthly condominiumfee to cover their portion of the operatingexpenses of the common property elements.A portion of this fee is allocated to the reservefund that is created to ensure that there aresufficient funds available for major repairsand replacements over the life of the building.Calculation of condominium fees varies byprovince but is usually specified in thegoverning documents of the condominium

corporation. Condominium fees are usuallycalculated from the annual operating costof the entire condominium and divided bythe percentage of your contribution to thecommon expenses (your unit factor) asoutlined in the condominium governingdocuments and/or local legislation.These fees may include:

Day-to-day care and upkeep of thecommon property elements (e.g. snowremoval, landscaping, cleaning of common

elements including carpets and exteriorwindows, heating/cooling systemmaintenance)

Contributions to the reserve fund, whichis used to pay for major repairs to, andreplacement of, common building systemsto ensure the condominium is kept ingood repair over the life of the building

Property management fees

Building repair and maintenance

Salaries of condominium employees (e.g.superintendent, security guards, concierge)

Amenities (e.g. use of pool, recreationalfacilities, party room)

Utilities

The corporations insurance policies

Cable and/or Internet access

15


Know What You Can Afford

If you are presently renting and are looking at

purchasing for the first time, here are someimportant points to consider when assessing whatis affordable for you. Canada Mortgage andHousing Corporation can help you to determinewhat you can afford with an on-line calculatoravailable free of charge at www.cmhc.ca

DownpaymentThe more you can afford to put down as adeposit, the less interest you pay over the courseof your mortgage.

MortgageConsider the type of mortgage, rate of interest andterm. Consult with your financial advisor or bankloans officer to decide what works for you. Be sureto factor in the costs of mortgage insuranceif applicable (required if the deposit is less than25 per cent of the units purchase price). Lifeinsurance may also be desirable but ensure that thecosts are also factored into your monthly budget.

FeesAs a condominium owner, you will pay a monthlyfee toward your share of the operation and

maintenance of the common property elements.Youll need to know exactly what is and isntincluded in the fees for any condominium youconsider, and how much you can expect to pay.

Property TaxWhen you rent a place to live, the property tax isusually a part of your rent. When you own acondominium, you are responsible for paying yourown property taxes. For a new condominium, themunicipality where your condominium is locatedshould be able to tell you how much you canexpect to pay. For existing condominiums, this

information can be provided by the real estateagent or the vendor.

UtilitiesThese may or may not be included in yourmonthly condominium fee. You will want to knowwhat you might expect to pay for utilities such asnatural gas, water and electricity.


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What is, and is not, included in acondominiums monthly fees should beclearly outlined in the operating budget.

You should be able to find out more aboutthe condominium fees from the vendor,property manager, the Board of Directorsor the developer prior to purchasing a unit.They should be stated in the disclosurestatement (for new condominiums) or inthe estoppel or status certificate (for resalecondominiums). These fees may have to beadjusted from time to time to reflect thechanging costs of goods and services and thestate of the reserve fund. Each adjustment is

reflected in the next years budget.

If the Board overestimates the commonexpenses, the surplus is wholly applied eitherto future common expenses or is paid intothe reserve fund. Refunds are not given tounit owners. If a unit owner sells a unitbefore the end of the condominiumcorporations fiscal year, the owner cannotobtain a refund for common expenses but

may add it to the units purchase price.

Condominium fees are neither optional nornegotiable. For example, unit owners arerequired to pay a share toward the care andupkeep of amenities such as swimming pools,regardless of whether or not they plan toactually use the pool. Unit owners cannotwithhold payment of their condominiumfees if they are displeased with the Board ofDirectors, the property manager or other unit

owners. In some provinces, the condominiumcorporation can register a lien on your unitif you do not pay your share of the commonexpenses. This means the corporation mayhave the right to sell the unit to recover themoney it is owed.

Extraordinary Expenses

If the Condominium has a short-fall in

the operating budget or reserve fund, orunforeseen events occur (for example, a risein heating costs or a need for a major repairor renovation, the higher cost will necessitatean increase in your contribution.

When this happens, each owner couldbe given a special assessment charge.The amount owed by each owner iscalculated by the percentage of ownership,or unit factor as previously discussed.The amount owed by the owner may beeither added as a lump sum to one monthof an owners regular monthly condominiumfees, or, it could be spread over a period oftime by increasing a number of monthlycondominium fees. Special assessments areuncommon but in some cases, such as wherefunds are needed for major repairs, they canbe substantial. This is why it is important toreview the financial statements, reserve fund

level, building condition surveys, inspectionreports, maintenance history and the estoppelor status certificate for the corporation beforeyou commit to buying. The following sectionwill provide you with more information inthis regard.


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Questions to Ask in Choosing

a Condominium

What is the current state of construction,and how quickly can it be expected toprogress?

Does the occupancy date meet myrequirements?

Can the occupancy date be changedand under what conditions?

Is the building type (i.e. high-rise,townhouse, freehold/bare land, loft)the one I really want?

Will a provincial new home warrantyprogram cover the unit?

What is the purchase cost of the unit,and what is included in that cost?

What other costs will I have to cover whenI take ownership, and how much shouldI expect to pay for each?

What are the current monthlycondominium fees, and what do theyinclude?

What mortgage interest rates are available? What kind of mortgage is right for me?

Will I be able to meet all of my financialobligations if I buy this condominium?

Will I need mortgage insurance and if so,what does it cost?

More questions that should be considered canbe found in Appendix C of this Guide.

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Who Should I Consult About Buying

a Condominium?

There are a number of professionals whocan help you find the right condominium.Real estate agents, lawyers and notaries,developers and financial advisors all playan important role.

Because buying a condominium is differentfrom buying a traditional house, its a goodidea to enlist the help of professionals whospecialize in condominiums.

Real Estate Agents

A good real estate agent specializing inexisting condominiums can help you savetime and energy.

You can choose to deal with the vendorsreal estate representative (for existingcondominiums), but you should really enlistone who will act only on your behalf. If youdeal with the vendors agent, there should be

no charge to you, as the agent will be paida commission by the vendor. An agent actingexclusively for you should not charge a fee forhis/her services, as he/she normally shares inthe vendors agents commission. Make sureyou are clear on who is paying the real estateagents commission, and what your obligationsare once youve signed an agreement.

When you meet with your agent, be specificabout what features youre looking for,location, and your budget. This will allowyour agent to pre-screen condominiums onthe market that are within your price range,in the neighbourhoods you want to live in,with the features and amenities you want.

A real estate agent can also assist you inmaking an offer to purchase once youvefound the unit thats right for you.

Remember for a re-sale unit purchase,make the offer conditional upon gettingall corporation documents available to thepurchaser under provincial legislation,including an estoppel or status certificatewhere available, or the financial statementsand governing documents for thecondominium. Making any sale conditionalupon a satisfactory review of thecondominiums financial condition andinspection by a qualified professional is

also highly advisable.

Lawyers and Notaries

Hiring a real estate lawyer (or notary inQuebec) who is knowledgeable aboutcondominiums is the best way to ensure thatyour legal interests are protected. Your lawyerwill help you by explaining all thedocumentation for the condominiumincluding the declaration, by-laws, rules and

disclosure statements and will review youroffer to purchase and the purchase and saleagreement. Your lawyer should be able todetermine whether or not there are anypending legal actions against the condominiumthat may have financial implications to theunit owners.

If your offer to purchase is accepted, yourlawyer will be responsible for many of theclosing arrangements.

Architects, Engineers, Home Inspector

Agencies and Document Review Services

Having your potential new home inspectedby a professional is a wise idea. All too often,

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3 - Getting Help from the Experts


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people make purchase decisions too quicklydue to the desirability of the condominiumor in anticipation of competing offers. This

can leave buyers in a situation where theycould face substantial costs after they takeownership of the unit due to construction-related defects that may have been detectedby a pre-purchase inspection. For an objectivereview of the condition of your unit andbuilding, it is recommended that you finda qualified inspector in the yellow pages oron Web sites such as that supported by theCanadian Association of Home Inspectors atwww.cahi.ca. Additional information on

inspections is discussed in following sectionsof the Guide.

Condominium document review specialists(only available in Alberta to date) canbe retained to assess the status of thecondominium corporation through the reviewof the condominiums governing documents,financial statements, etc. The agreement topurchase offer can be made conditional upon

the satisfactory review of condominiumdocuments by persons offering this service.

Financial Advisors

Ensure you can afford your mortgage andthe monthly expenses you will face as a resultof your purchase. Your bank manager orfinancial advisor can help you customize yourmortgage to suit your financial goals andneeds. CMHCs on-line Homebuying Stepby Step Guidecan also help you to determine

what you can afford. You can find theguide on CMHCs Web site atwww.cmhc.ca.

There are many different types of mortgages,including conventional, high-ratio andsecond mortgages. Take the time to discuss


20

Consider Your Mortgage Options

Mortgage payments are made up of the principal

sum (the amount you borrow) and interest (theamount you pay to borrow the principal).The bestplan is to minimize the amount of interest youpay. Some options include:

A larger downpaymenta smaller mortgagemeans less interest

A shorter amortization periodthe faster youpay off the loan, the less interest you pay

A weekly or bi-weekly payment scheduleinstead of monthly payments

Optional Lump sum paymentson top ofregular payments to pay down the principal

portion of the loan

Features of a mortgage that you may wishto consider, include:

Prepaymentensure you can pay down yourmortgage with a lump sum without penalty

Portability-allows you to transfer the terms andconditions of your mortgage to your next home

Assumability-allows you to take over the existingmortgage on the property, as it may have alower interest rate than the current market; anassumable mortgage may also be a selling

feature for when you decide to move

Expandability-allows you to expand upon thefirst mortgage at the lenders agreed-upon rateof interest

Flexibility-This allows you to skip one or moremortgage payments a year-this may relievesome financial pressure during a tight period,but skipping a payment will add a month to

your mortgage

Federal legislation restricts banks from providingmortgages of more than 75 per cent of the

purchase price of a home without mortgageinsurance. CMHC mortgage insurance enablesCanadians to purchase a home with as little as a5 per cent down payment. If the home buyer doesnot fulfill the terms of the mortgage contract anddefaults on mortgage payments, CMHC mortgageinsurance protects the mortgage lender (typically


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your current financial position and futuregoals with your financial advisor and be surethat you are comfortable with your purchase.

How do I Know if a Condominium

is in Good Financial Condition?

The financial well being of the condominiumcorporation is an important consideration.Buying into a condominium corporation thatis insufficiently funded to operate and maintaincommon elements is a risky proposition. Lowcondominium fees may make one condominiummore appealing than others, but it may be a

sign that the condominium corporation is ill-prepared to fund major repairs and renewalprojects. As a result, the condition of the

condominium property can deteriorate or youmay be faced with substantial charges fromthe condominium to cover repair costs as theyoccur. Fortunately there are ways to determinethe financial status of the condominium basedon the documentation that the condominiumcorporation is obliged to keep, such as theannual operating budgets and end-of-yearfinancial statements. For resale condominiums,check the estoppel or status certificate. For newcondominiums review the disclosure statement.

An important part of the operating budget isthe reserve or contingency fund.

The Condominium Reserve fund

The purpose of a reserve fund is to providefinancing for major repairs and renewalprojects over the life of the condominiumbuilding. The fund essentially ensures thatthe condominium common elements will bemaintained in good shape for the life of the

project. The amount required to be in thereserve fund depends upon the condition andlife expectancy of all of the common elementsin the building and the estimated cost toreplace them over the life of the project.The amount each unit owner is required tocontribute to the reserve fund, usually viamonthly condominium fees, is determined byestimating what would have to be set aside ona monthly basis to cover the long-term costs.

Reserve fund studies are updated from timeto time, depending on provincial regulationsor at the discretion of the condominiumcorporation. The studies are conducted byprofessionals capable of assessing the conditionof the common elements of the building,estimating remaining life spans and the related

21


your Bank) from losses on the mortgage. Thisarrangement assures the lender that mortgagefunds are not at risk and the home buyer is ina position to purchase a home sooner. Theminimum 5 per cent down payment must comefrom the home buyers own resources and thelender must verify that the home buyer can coverthe closing costs of at least 1.5 per cent of thepurchase price. CMHC mortgage insurance doesnot provide insurance for other aspects of thehome purchase such as property and casualtyinsurance, housing quality or life insurance.

Application for mortgage financing for thepurchase of a condominium should be madedirectly through your lending institution which, in

turn, will forward the application for mortgageinsurance to CMHC on your behalf. Theassessment of a borrower is considered to be themost demanding task in the review of homeownership loans. CMHC provides guidelines tolenders for assessing borrowers. Based on yourpersonal circumstances, your financial institutioncan provide you with the information relating tothe maximum mortgage for which you wouldqualify.

You can get more information from the freeHome buying Step by Step Guide published by

CMHC by visiting the Canada Mortgage andHousing Corporation website at www.cmhc.caor by calling 1 800 668-2642


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repair and/ or replacement costs. Based on theirobservations, the reserve fund studyprofessionals estimate the monthly or annual

contributions necessary to fund the long-termrenewal of the common elements. Afterreceiving the reserve fund study, the Board ofDirectors can propose a plan for thesustainability of the fund, including monthlycontributions from owners as part of thecondominium fees. In some provinces this ismandatory, while in others it is optional.

You do not want to move in your new homeonly to discover that the reserve fund is under

funded and major repairs are required. Thiscould mean a significant increase in condominiumfees or the levying of charges, commonlyknown as special assessments, to the unit ownersby the condominium corporation to pay forthe needed repairs. Special assessment chargescan be high depending on the type of workrequired. Ensure you obtain and review eitherthe disclosure statement or the estoppel orstatus certificate to determine the current

state of the reserve fund.

How do I Know if a Condominium

is in Good Physical Condition?

Very often, new condominiums are protectedby new home warranty programs that ensurethe common property and individual units arein good condition. In such cases, an inspectionwill be conducted to ensure that thecondominium is properly constructed and

finished. Any defects in or omissions ofwarrantied elements will be listed and thedeveloper may be obliged to correct them ifthey are material. Long-term warranties onmajor components such as structural elementscan run for as long as 5-7 years after a buildingis completed. At this point, a performance or

technical audit may be conducted to identifydeficiencies before the warranty expires.

For existing condominiums, the condition ofthe unit and building you are considering buyingcan be determined by a review of technicalaudits (essentially a building-wide inspection)done in conjunction with reserve fund studies.These audits will provide you with an overviewof the condition of the building and commonelements, but not necessarily of any of theindividual units. A technical audit may beavailable as a part of the reserve fund study insome provinces. Avoid any surprises and ask to

see these reports before you make your decision.

You should also consider hiring a qualifiedhome inspector, who specializes in the typeof condominium you are thinking of buying,to inspect the unit and building. Theinspector should have condominiumexperience and provide a detailed writtenreport on the unit and visible commonelements, whether any repairs are necessary

and the estimated cost. If more than one setof repairs is necessary, the report should putthem in order of prioritywhat needs to befixed first, and what can wait.

It is always a good idea to examine theinspection contract very closely to determinewhat exclusions or disclaimers it contains.Ask for the credentials of the inspectors (e.g.membership in the Canadian Association ofHome and Property Inspectors) or (is the

inspection firm licensed provincially) and askfor proof of errors and omissions insurance.If a costly repair is required that was missedin the report, the inspector might becomefinancially responsible to compensate youfor the repairs.


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If you suspect that there may be an indoor airquality problem in the unit you are purchasing,an indoor air quality (IAQ) investigation can

be arranged. An initial IAQ inspection canprovide a subjective evaluation of the airquality of the unit and identify the potentialpresence of mold, airborne particulates,volatile organic compounds, poor ventilation,and odours from other units and other sourcesof indoor air quality problems. For a list ofpeople who have completed the CanadaMortgage and Housing CorporationsResidential IAQ Investigator TrainingProgram and further guidance on hiring

an inspector for a pre-purchase inspection,call 1 800 668-2642 or consult CMHCsWeb site atwww.cmhc.ca

Physical Checklist

Use this checklist to evaluate the physicalstate of the condominium:

Common Elements - Interior

Lobby is clean and in good repair, exteriordoors, locks and security system functional

Recreational amenities (if any) are ingood working order and clean

Elevators are clean and functional

Corridors are clean, well-lit, odour free,carpets in good repair, paint unmarked

Stairwells are well-lit, doors and doorhandles are functional

Common basement or locker facilities

are well-lit, clean and dry

No signs of water leaks or mold

Underground parking structure does notshow any evidence of leaks or concretedeterioration

All areas meet your needs for easeof accessibility

Common Elements - Exterior

Garbage in receptacles/dumpsters

Snow and ice removed from walkways

and parking areas Amenities are clean and in good repair

including external recreational facilitiesand landscaping

Exterior walls are not cracked, corrodedor water stained

Balcony railings are rigid, rust free andbalcony slabs are not breaking up

Roadways, sidewalks and parking areasare in good shape with no standing water

Block heaters are functional

Good pathway and parking lot lighting

Walls: no water stains, corrosion, loosesiding, white marks on brick

Lawn, fences, playground structures andlandscaping are in good condition

Unit

Favourable initial reaction to odours

upon entering the unit Exterior door to unit is in good repair,

with unmarked paint and functioninglatch and locks

Drywall not dented or broken

Paint unmarked

Flooring (including tile, hardwood andcarpeting) clean and in good repair, withno stains, holes or burn marks

Smoke detectors are present

Interior doors in good repair, open andclose easily and latches/knobs functional

Windows open, shut and lock easily,glass is unscratched, no noticeabledrafts, no mold, seals in place

No visible water stain marks/damageddrywall around windows, near floors orceilings

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All light fixtures are operational

Appliances (if included) are functional,clean and in good repair

Plumbing does not drip

Toilets flush and refill properly

Bathtub and shower walls are clean andsolid

Electrical sockets function

Kitchen cupboards in good repair withfunctional doors and no signs of pests(insects or mouse droppings)

Basement is dry, there are no obvious

odours and free from evidence of waterdamage (indicates previous flood)

Basement sump-pump in the unitis functional (if applicable)

Unit heating and air conditioningsystem working

Exhaust fans in kitchen and bathroomare operational


24

A Note on Mold:

Molds are microscopic fungi that we encounter

everywhere, everyday. Foods spoil because of mold,leaves decay and wood rots.The fuzzy black growth onwindowsills is mold. Musty smells in damp locations iscaused by mold. Mold grows where the temperature,moisture conditions are right and where it has a sourceof nutrients. If we keep things dry, molds do not grow.

In houses and apartments, mold growth occurs due tothe presence of high moisture levels caused by leakageof rain or snow from outside, plumbing leaks, poorbasement drainage and cooking and bathing activitieswithout adequate ventilation. Under such conditions,mold will grow on any surface that will nurture its

growth such as wood, drywall, paper and carpets.

Mold is a concern as it damages construction andfinishing materials in our homes. Materials becomestained, discoloured and over time, ruined. Moldy paperand cardboard boxes disintegrate while wood rots andlooses its structural integrity. Mold is also a healthconcern. Health experts indicate that exposure tocertain types of molds over a sufficient period of timecan cause illness and allergic reactions in susceptibleindividuals such as pregnant women, infants, the elderlyand those with health problems.

Mold is a problem if it starts to actively grow inside adwelling. Small isolated mold growth on windowsills isnot a big problem as it can be easily cleaned andprevented. Once mold has covered an area greater thatone square meter, it becomes a concern and experts inmold removal and prevention should be consulted.

Remember, the presence of mold is usually a sign thatthere is a moisture problem within the unit or building.Solutions range from simply increasing ventilation viaoperable windows or use of exhaust fans through toremoval of contaminated materials, solving themoisture problem and restoring the affected areas. If

you detect a significant amount of mold, you shouldseriously reconsider your interest in the unit, as theproblem may not be easily or quickly resolved.

For more information on detecting and solving moldproblems, consult CMHCs Web site at www.cmhc.caor call 1 800 668 2642.


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What Information Does the

Condominium Corporation Have

that Could Help Me?

Whether youre buying a new condominiumfrom a developer, or looking at a re-saleproperty, the seller should provide you withinformation about the unit and the corporation.Essential documents you should have include:

Governing documents - constitution,declaration, condominium plan, by-laws

Estoppel/status certificate for resalecondominiums or disclosure statements

for new condominiums Reserve fund study and/or

performance/technical audit

Operating budget, financial statements,annual general meeting minutes andreserve budget (for re-sale condominiums)

If you are having difficulty obtaininginformation on a condominium corporationor a particular unit, consult your lawyer or

check your provincial regulations for yourrights regarding access to information.You may also want to reconsider purchasinga unit in a building where such documentsare difficult to access as it may be indicativeof problems with the building orcondominium management.

If you are looking at a re-sale condominium,you may be able to meet some of yourprospective neighbours, speak with the

Board of Directors or ask questions to theproperty manager. Speaking with peoplewho already live in the condominiumgives you the opportunity to ask themabout the community, the operationsand the management of the condominiumcorporation. They should be able to give you

a look at life in this particular condominium,information that should help you to decide ifits the right choice for you.

Questions to ask when choosing

a condominium

Does your real estate agent specializein condominiums and understandyour needs?

Is your lawyer or notary knowledgeableabout condominiums?

Can your lawyer or notary explainprovincial condominium legislationand the condominiums governingdocuments in a way you canunderstand?

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A note on Quebec

In Quebec there is a declaration of co-ownership

and a register containing the by-laws, financialstatements etc. This register is accessible toco-owners only. Prospective buyers can consultthe register only if they have a mandate (proxy)to that effect from the co-owner-vendor. There isno estoppel or status certificate or access toinformation as found in other provinces. Thevendor may supply the prospectus-known as amemorandum in Quebec if the building wasregistered after January 1st 1994 and has 10residential units or more. This informationincludes:

The name of the architects, engineers, buildersand developers (called promoteurs in French)

A plan of the overall real estate developmentproject

A summary of the descriptive specifications

Budget forecast

Information on common elements

Management of the immovable

The right of emphyteusis or superficies affectingthe immovable.


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Board of Directors

Each condominium has a Board of Directors

that is elected by, and generally made up of,the unit owners. The Board is responsible foradministration and management of thecondominium corporation, including policyand finances, as well as decisions about themaintenance and repair of the commonproperty. Some decisions will directly affectyour use of common property elements.Unit owners are usually entitled to one votefor each unit they own for each position onthe Board of Directors.

Common Elements

or Common Property

Common elements or common property arethe portions of the condominium that are notowned by a unit purchaser as part of his/herindividual unit. They are shared and co-owned by all the individual owners of thecondominium corporation. They usually (but

not always) include such things as corridors,elevators, recreational facilities, playgrounds,lobbies, the grounds, central heating and air-conditioning systems and parking. What isand is not included, as part of the commonproperty elements, must be listed in thecondominiums governing documents. It ispossible that some of the common elementsmay be reserved for the personal use of one orseveral owners. They are known as restrictedor exclusive use common elements.

Disclosure Statement

In some jurisdictions, the developer of a newcondominium must provide you with adisclosure statement before the agreement ofpurchase and sale is binding. The statement

includes, among other things, a summary offeatures/amenities, proposed commencementand completion dates for construction, the

condominiums governing documents andbudget for the first year after registration.

Emphyteusis

This term can refer both to a type ofcontract, an emphyteutic lease and to theright granted under an emphyteutic lease,emphyteusis. Under an emphyteutic lease,a property is leased to a tenant for a periodof not less than nine (9) years and not morethan ninety-nine (99) years. The lease willspecify the annual rent to be paid, and willrequire the tenant to improve the propertyby doing things such as constructing andimproving upon buildings. During the termof the lease, the tenant has the right totransfer the property to another party andto mortgage the property. At the end of thelease the tenant must return the propertyto the landlord in good condition. Any

improvements made to the property will beowned by the landlord. This type of lease canbe used in the development of commercialproperty or other forms of land development.

Estoppel Certificate

or Status Certificate

Most jurisdictions require condominiumsto issue information packages to prospectivebuyers. This package can contain thedeclaration, by-laws, rules and regulations,insurance information, reserve fund balance,other financial disclosures, legal descriptionof the unit and management contract(if applicable). It may also includeinformation about any legal filings orjudgments against the condominium

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Appendix A - Glossary of Terms


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corporation, the possibility of commonexpense increases, special assessments orinsurance claims, all of which could affect

condominium fees.

Governing Documents

These are the documents that describe howthe condominium is organized and operated.They have different names in differentprovinces, but they can include declarations,by-laws and rules. They can containprovisions setting out the boundaries of thecommon elements and the individual units,the percentage of ownership each owner hasin the common elements, the by-laws/budgetand common expenses. Governing documentsvary from one condominium to another andare filed with the land registry office whenthe condominium corporation is created.

Property Manager

The property manager handles the day-to-day

running of the condominium, such as hiringof staff, maintenance and repairs. Theproperty manager is under contract to thecondominium corporation. A representativefrom the property management companyusually attends board meetings. Somecondominiums may not have a propertymanager. These are sometimes referred to asself-managed condominiums. The Board ofDirectors, with the help of volunteers, willassume responsibility for the day-to-day

management in these cases.

Reserve Fund

This is a fund set up by the condominium

corporation in a special account to coverthe costs of major repairs and replacementof the common property elements over time.Usually it is at least 10 per cent of thecorporations total operating expenses,although the criteria vary between provinces.In some jurisdictions, such as Quebec, thereserve fund is called a contingency fund.Reserve fund amounts and contributions aremore accurately determined by a technicalaudit and reserve fund study undertaken bya qualified consultant.

Unit

Home sweet home. The unit is the area thatyou actually own and hold title to. Repairand upkeep of the unit are generally yourresponsibility.


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There is plenty of information available tohelp you. The following is a list of sourceswho have agreed to appear in this section of

the Guide, and who will be more than happyto provide impartial information and advice.

Government Sources

Each province in Canada has its ownlegislation to regulate condominiums.The following list can help you learn whereto find condominium information specificto your province.

Canada Mortgage and HousingCorporation (CMHC)www.cmhc.ca1 800 668-2642

Publications of Interest:

Homebuying Step by Step: A ConsumerGuide and Workbook

Homeowners Inspection Checklist

Mortgage Calculator

The Condominium Owners Guideto MoldYour Next Move: Choosing a

Neighbourhood with Sustainable Features

AlbertaThe Condominium Property ActandCondominium Property RegulationMinistry of Government ServicesToll-free (in Alberta): 1 800 310-4455Toll-free (outside Alberta): (780) 427-2711

Web site:www.gov.ab.ca

British ColumbiaThe Strata Property ActMinistry of Finance, Financial and CorporateSector PolicyTel: (250) 387-1269Web site:www.fin.gov.bc.ca

ManitobaThe Condominium ActMinistry of Consumer and Corporate Affairs

General Information - Citizens InquiryService: (204) 945-3744TDD: (204) 945-4796Toll-free (Manitoba only): 1 800 282-8060Web site:www.gov.mb.ca/cca

New BrunswickLand Titles ActMinistry of Family and Community ServicesTel: (506) 453-2001Web site:www.gov.nb.ca

Newfoundland and LabradorCondominium ActGovernment Services and LandsTel: (709) 729-3316Web site:www.gov.nf.ca

North West TerritoriesCondominium ActDepartment of Justice

Tel: (867) 920-6197Web site:www.gov.nt.ca

Nova ScotiaThe Condominium ActService Nova Scotia and Municipal RelationsToll-free within N.S.: 1 800 670-4357Toll-free from outside N.S.: 1 (902) 424-5200Web site:www.gov.ns.ca/snsmr

Nunavut

Condominium Act (Nunavut)Nunavut Housing CorporationTel: (867) 975-6411Web site:www.nunavut.com

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Appendix B - Where to Find More Information


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OntarioThe Condominium ActMinistry of Consumer and Business Relations

General Inquiry: (416)-326-8555TTY: (416) 326-8566Toll-free: 1 800 268-1142Web site:www.cbs.gov.on.ca

Prince Edward IslandThe Condominium ActOffice of the Attorney GeneralTelephone: (902) 368-4550Web site:www.gov.pe.ca

SaskatchewanThe Condominium Property ActJustice DepartmentTelephone: (306) 787-8971Mailing Address: 1874 Scarth Street, Regina,SK S4P 3V7Web site:www.saskjustice.gov.sk.ca

QuebecCivil Code (Code civil)

Book One Art. 299 to 364Book Four Art. 1010 and 1038 to 1109Art. 1299 to 1370

Web site:www.soquij.qc.ca

YukonThe Condominium ActDepartment of Justice, Land TitlesGeneral Inquiries: (867) 667-5612Web site:www.gov.yk.ca

Warranty Programs

Atlantic New Home Warranty Program

www.ahwp.org

Association provinciale des constructeursdhabitations du Qubecwww.apchq.com

Ontario New Home Warranty Programwww.newhome.on.ca

Manitoba New Home Warranty Programwww.mbnhwp.com

New Home Warranty of Saskatchewanwww.nhwp.org

Alberta New Home Warranty Programwww.anhwp.com

British Columbia Homeowner ProtectionOfficewww.hpo.bc.ca

Private Warranty Programs

London Guarantee Insurance Companywww.londonguarantee.com

National Home Warranty Programswww.nationalhomewarranty.com

Residential Warranty of Canada Inc.www.reswar.com

Wylie-Crump Limited - Marathonwww.wyliecrump.com


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Non-Government Sources

The Canadian Condominium Institute

(CCI)The Canadian Condominium Institute is anindependent, non-profit organization formedin 1982 with chapters throughout Canada.

CCI-NationalSuite 310-2175 Sheppard Ave. E.Toronto, ON M2J 1W8Tel.: (416) 491-6216Fax: (416) 491-1670E-mail: [email protected] site:www.cci.ca

CCI-North Alberta ChapterP.O. Box 777Edmonton, AB T5J 2L4Tel.: (780) 413-8334Fax: (780) 413-7532E-mail: [email protected] site:www.cci-north.ab.ca

CCI-South Alberta ChapterSuite 2266, 246 Stewart Green S.W.Calgary, AB T3H 3C8Tel.: (403) 253-9082Fax: (403) 242-8145E-mail: [email protected] site:www.cci-south.ab.ca

CCI-North SaskatchewanP.O. Box 7074Saskatoon, SK S7K 4J1

Tel.: (306) 652-0311Fax: (306) 652-0373E-mail: [email protected] site:www.cci.ca

CCI-ReginaP.O. Box 240112160 Broad St.,

Regina, SK S4P 4J8Web site:www.cci.ca

CCI-ManitobaP.O. Box 2517Station MainWinnipeg, MB R3C 4A7Tel.: (204) 944-8954E-mail: [email protected] site:www.cci-mb.com

CCI-Toronto and AreaSuite 310-2175 Sheppard Ave. E.Toronto, ON M2J 1W8Tel.: (416) 491-6216Fax: (416) 491-1670E-mail: [email protected] site:www.ccitoronto.org

CCI-HuroniaP.O. Box 31023

Barrie, ON L4N 0B3E-mail: [email protected] site:www.cci.ca

CCI-London and AreaP.O. Box 25411395 Wellington Rd.London, ON N6C 6B1Tel.: (519) 453-0672Fax: (519) 453-3604Web site:www.cci-sw.on.ca

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CCI-Ottawa1910 St. Laurent Blvd.P.O. Box 41159

Ottawa. ON K1G 5K9Tel.: (613) 247-4718Fax: (613) 247-8794E-mail: [email protected] site:www.cci.ca/ottawa

CCI-Golden HorseshoeUpper Brant Postal Outlet,Box 40513Burlington, ON L7P 4W1Tel.: (905) 521-8144

Fax: (905) 634-7367E-mail: [email protected] site:www.ghccci.org

CCI-Windsor-Essex CountyP.O. Box 693, Station AWindsor, ON N9A 6N4Tel.: (519) 256-0594Fax: (519) 253-0309Web site:www.cci.ca

CCI-Atlanticc/o 1741 Brunswick St.,Suite 401Halifax, NS B3J 3X8Tel.: (902) 830-0491Fax: (902) 423-2485E-mail: [email protected]

CCI-British Columbia (In Development)E-mail: [email protected]

CCI-Northwestern Ontario(In Development)E-mail: [email protected]

QuebecQuebec Association of Syndicatesof Co-ownership

Web site:www.ascq.qc.caTel: (514) 866-3557

Publications

CM - Condominium ManagerAssociation of Condominium Managersof Ontario2121 Argentia Road, Suite 404Mississauga, Ontario L5N 2X4Tel: (905) 826-6890, 1 800 265-3263Fax: (905) 826-4873E-mail: [email protected] site:www.acmo.org

Condo Business Magazine5255 Yonge St.Suite 1000Toronto, ON M2N 6P4Tel: (416) 512-8186Fax: (416) 512-8344

E-Mail: [email protected]:www.mediaedge.ca

BCCONDO.COME-mail: [email protected] site:www.bccondo.com

Cmhc Condo Buyers Guide

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